Beyond Bitcoin: The Next Killer Blockchain App May Be For Healthcare

Recently, a friend who invests in blockchain technology asked whether I remembered the early internet. If you were bored 25 years ago, he said, you might have done the same thing you’d do today: go online. Except in 1992, you would have signed onto the internet using a modem, waited 20 long seconds to connect, and then spent a majority of your time hanging out in AOL chatrooms. Those AOL chatrooms, he proffered, were to the early internet what bitcoin is to blockchain today. In other words, blockchain is still in its infancy and we have no idea what future killer blockchain apps might be.

Blockchain, the distributed ledger technology at the heart of digital cryptocurrencies like bitcoin, has the potential to transform and re-imagine connected healthcare. Healthcare, as we know, is ripe for disruption: in the US we spend the most per person yet have some of the worst outcomes of the developed world. Three key areas for blockchain’s focus in healthcare appear to be in health data interoperability, supply chain validation, and revenue cycle management.

What is blockchain?

Blockchains are built on a ledger of accounts. A ledger is a list that tracks asset ownership and transactions over time. Corporate balance sheets, property registries and medical records all rely on a form of ledgers.

In a traditional hospital IT network, sensitive patient health data is stored in ledgers on centralized servers, which has led to the unfortunate result of creating a huge target for ransomware attacks. Coupled with patient privacy concerns and the desire to maintain competitive advantages, these centralized EHRs have created health data silos, often leading to poor interoperability across systems and having an overall negative impact on patient care. Premier Healthcare Alliance found that sharing data between its 333 member hospitals saved 92,000 lives and $9.1 billion over 4.5 years. If replicated nationally, hospitals could save 950,000 lives and approximately $93 billion over 5 years.

What is unique about a blockchain ledger is that it is distributed rather than centralized. In a blockchain, each participant – called nodes – maintains an identical copy of the ledger. When a transaction – or block – is added or changed, all the data from that block is represented by a cryptographic set of random numbers and letters called a hash. The same hash will always result from the same data, but modifying the data by even one bit will completely change the hash. These transaction blocks are verified by super-computers called miners through a process called consensus, which leads to a verified, immutable chain of blocks or blockchain. This gives the blockchain unprecedented security benefits and makes ransomware attacks on the blockchain exceedingly difficult.

Data interoperability

Improving the interoperability of health care data is a major focus of public and private initiatives. In 2016, the Office of the National Coordinator for Health Information Technology sponsored an ideation challenge to solicit white papers on the potential uses of blockchain technology in interoperability, privacy and scalability. Large companies like Accenture and new upstarts like MedRec are working to use blockchain technology to improve health data interoperability. MedRec’s blockchain-based system operates as a layer above the provider’s legacy EHR systems to help connect health data where it currently resides. A novel design feature of MedRec is the way records are validated and added to the blockchain. The miners for MedRec are medical researchers who are rewarded with access to anonymized health data.

Supply chain

Blockchains are already being used in many industries for supply-chain verification (like fish and diamonds). Blockchains can also be used to track the manufacture and distribution of pharmaceuticals and medical devices, and ensure that counterfeit products don’t enter the market. Some see blockchain as a potential cost-efficient method for pharma companies to comply with the Drug Supply Chain Security Act, which dictates that, by 2023, pharma companies have systems in place to trace drug supply-chain information.

Claims management

The life cycle of a traditional health claim often requires significant time and costs. One study found that physicians spend on average about $83,000 each year dealing with payors. The reverse must be true as well: every call from a doctor’s office to the payor requires someone on the payor’s side to answer the call.

Established payors like Humana and new blockchain companies like Gem are looking to blockchain technology to help make claims management systems more efficient. In a blockchain-enabled claims management system, the providers and payors have access to a shared, private blockchain, with the provider agreement requirements written in code into a digital “smart contract” that automatically execute with no human intervention once coded conditions are met. For example, if a provider submits all required claim elements, the smart contract would then automatically process and pay the claim, leading to dramatically improved efficiencies. If the patient’s insurance benefits (such as deductible and co-pay) were also included on this blockchain, the provider could provide the patient with an accurate estimate of the patient’s out-of-pocket costs at the time the procedure was being discussed.

Legal hurdles to blockchain remain

To realize the full potential of blockchain to transform connected health, there are key legal, regulatory, and governance issues that will need to be resolved. In our next article, we’ll review some of those issues and how some governments and groups have started work to modify laws and regulations to adapt to this new distributed ledger technology. Stay tuned.

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